Cadence Design Systems, Inc.
$408.00
-1.5%Cadence Design Systems, Inc. provides software, hardware, services, and reusable integrated circuit (IC) design blocks worldwide. The company offers functional verification services, including emulation and prototyping hardware. Its functional verification offering consists of JasperGold, a formal verification platform; Xcelium, a parallel logic simulation platform; Palladium, an enterprise emulation platform; and Protium, a prototyping platform for chip verification. The company also provides digital IC design and sign off products, including Genus logic synthesis and Joules RTL power solutions, as well as Modus software solution to reduce systems-on-chip design-for-test time; physical implementation tools, such as place and route, optimization, and multiple patterning preparation; and signoff products to signoff the design as ready for silicon manufacturing. In addition, it offers custom IC design and simulation products to create schematic and physical representations of circuits down to the transistor level for analog, mixed-signal, custom digital, memory, and radio frequency designs; and system design and analysis products to develop printed circuit boards and IC packages, as well as to analyze electromagnetic, electro-thermal, and other multi-physics effects. Further, the company provides intellectual property (IP) products comprising pre-verified and customizable functional blocks to integrate into customer's ICs; and verification IP and memory models to emulate and model the expected behavior and interaction of standard industry system interface protocols. Additionally, it offers services related to methodology, education, and hosted design solutions, as well as technical support and maintenance services. The company serves 5G communications, aerospace and defense, automotive, industrial and healthcare, mobile, consumer, and hyperscale computing markets. Cadence Design Systems, Inc. was incorporated in 1987 and is headquartered in San Jose, California.
At a Glance
Live SnapshotIntrinsic Alpha Methodology
Thesis Lenses
Signal
High confidenceValuation multiple is elevated (P/E 99.8).
Valuation inputs: P/E 99.8, earnings yield +1.0%, momentum -1.5%.
If multiples stay elevated while momentum fades, downside repricing risk rises.
Driver
High confidenceReturn profile is strong (ROE +20.3%, ROIC +14.1%).
Profitability stack: net margin +20.9%, ROE +20.3%, ROIC +14.1%.
Quality deterioration often appears in margins before it shows up in headline EPS.
Risk
High confidenceDownside profile looks controlled across current risk inputs.
Risk factors: liabilities/assets +46.1%, momentum -1.5%, net margin +20.9%.
Higher leverage with weak momentum and thin margins can amplify drawdown severity.
Cadence Design Systems, Inc. Market vs Earnings Trajectory
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Cadence Design Systems, Inc. Fair Value Envelope
Cadence Design Systems, Inc. Profit Bridge
Profitability Analysis
Gross Margin
Exceptional pricing power and cost management. The company retains over half of revenue after direct costs.
Operating Margin
Outstanding operational efficiency. The company generates substantial profit from core operations.
Net Profit Margin
Exceptional profitability. The company converts a significant portion of revenue to bottom-line earnings.
Effective Tax Rate
Higher tax burden may reflect limited tax optimization or operations in high-tax jurisdictions.
Profitability Insight
Exceptional profitability across all levels: Strong pricing power, efficient operations, and healthy bottom line indicate a high-quality business with sustainable competitive advantages.
Cadence Design Systems, Inc. Cash Conversion Engine
Cash Flow Quality Analysis
FCF Conversion Rate
Excellent cash generation. The company converts earnings to cash at or above 100%, indicating high-quality earnings.
CapEx Intensity
Asset-light business model. Low capital requirements leave more cash available for shareholders and growth investments.
FCF Growth Trend
Strong FCF growth demonstrates improving cash generation and business momentum. Positive signal for sustainability.
Working Capital Impact
Minimal working capital impact on FCF. Changes in operating assets and liabilities well-managed.
Cash Flow Quality Insight
Exceptional cash generation: High-quality earnings converting to growing free cash flow. The company demonstrates strong pricing power, efficient operations, and disciplined capital allocation.
Cadence Design Systems, Inc. Funding & Solvency Profile
Financial Health Analysis
Current Ratio
Excellent liquidity position. The company can easily cover its short-term obligations with substantial cushion.
Debt-to-Equity Ratio
Conservative capital structure. The company relies primarily on equity financing, indicating low financial risk.
Working Capital
Strong working capital position provides significant operational flexibility and financial cushion.
Asset Composition
Capital-intensive business with significant long-term investments in property, equipment, or intangibles.
Financial Health Insight
Strong financial foundation: Excellent liquidity combined with conservative leverage suggests the company is well-positioned to weather economic uncertainties and fund growth opportunities.
Cadence Design Systems, Inc. Street Expectations Map
Wall Street analysts project that CDNS stock may see slight declines over the coming 12 months. The consensus 1-year price target stands at 406.67, with estimates ranging from a low of 370.00 to a high of 440.00.
The consensus 1-year price target stands at 406.67, with estimates ranging from a low of 370.00 to a high of 440.00.
Analyst Consensus Analysis
Upside Potential
Fair value territory. Stock trading near consensus target suggests limited near-term catalysts. Focus on fundamental developments.
Analyst Agreement
High analyst agreement. Narrow target range indicates strong consensus on valuation, suggesting clear investment thesis and predictable outlook.
Risk-Reward Profile
Unfavorable risk-reward. Downside risk exceeds upside potential. Consider defensive positioning or alternative opportunities.
Analyst Conviction
Neutral sentiment. Fair value pricing with moderate agreement suggests wait-and-see approach or catalyst-driven opportunity.
Market Sentiment Insight
Efficient pricing: Stock trading at fair value with strong consensus suggests market has priced in expectations. Look for fundamental inflection points or new catalysts to drive meaningful moves.
Cadence Design Systems, Inc. Insider Positioning
During the last 12 months, insiders have sold $31.42M worth of CDNS shares, with no buying activity reported.
3 Months
0
0.00
37.7K
12.13M
-12.1M
-$12.13M
3-6 Months
0
0.00
40.8K
13.49M
-13.5M
-$13.49M
6-9 Months
0
0.00
10.5K
3.46M
-3.5M
-$3.46M
9-12 Months
0
0.00
7.2K
2.35M
-2.3M
-$2.35M
Top Buyers
No buying activity
Top Sellers
Wall John M
Officer: Sr. Vp & Cfo
$8.84M
Teng Chin-Chi
Officer: Sr. Vice President
$7.70M
Devgan Anirudh
Director, Officer: President And Ceo
$7.07M
Scannell Paul
Officer: Sr. Vice President
$3.93M
Cunningham Paul
Officer: Sr. Vice President
$3.84M
Insider Activity Analysis
Net Insider Sentiment
Strong bearish signal with $31.42M net selling. Heavy insider selling may indicate concerns about valuation or near-term prospects.
Buy/Sell Ratio
Very poor ratio. Heavy selling with minimal buying suggests insiders may be concerned about valuation or outlook.
Recent Trend (3 Months)
Heavy recent selling activity. Recent insider sales notably exceed purchasesโmay warrant investigation into company developments.
Insider Participation
5 insider sellers vs. 0 buyers. Widespread selling across multiple insiders may signal concerns.
Insider Activity Insight
Multiple red flags: Heavy selling, numerous sellers, and continued recent selling create a concerning pattern. Investigate fundamental drivers and consider whether company guidance or industry conditions have deteriorated.
No Dividend Yield Data
CDNS has not reported any dividend yield values in the available annual periods.
cdns Dividend History
Learning Layer
Related Guides
Build conviction on CDNS by pairing this stock hub with focused valuation guides.
Research Paths
Snapshot
Start with context, operating signals, and key market metrics.
Value Model
Stress test fair value across bear, base, and bull assumptions.
Statements
Validate revenue quality, margins, and balance sheet durability.
Earnings Call
Read management commentary and compare it with reported outcomes.
Dividends
Check payout sustainability and long-term distribution behavior.
Analyst Expectations
Review consensus spread and where estimate risk is concentrated.